US pri­vate job growth slows in july trade deficit widens

The Pak Banker - - BUSINESS -

US pri­vate job growth slowed sharply in July, point­ing to a loss of mo­men­tum in the econ­omy head­ing into the third quar­ter that could tem­per ex­pec­ta­tions of a Septem­ber in­ter­est rate hike. Other eco­nomic data on Wed­nes­day showed a widen­ing of the trade deficit in June as solid do­mes­tic de­mand in the sec­ond quar­ter and a strong dol­lar sucked in im­ports of food and au­to­mo­biles.

"Job growth is strong, but it has mod­er­ated since the be­gin­ning of the year. Nonethe­less, even at this slower pace of growth, the labour mar­ket is fast ap­proach­ing full em­ploy­ment," said Mark Zandi, chief economist at Moody's An­a­lyt­ics in West Ch­ester, Penn­syl­va­nia.

Pri­vate em­ploy­ers hired 185,000 work­ers last month, the ADP Na­tional Em­ploy­ment Re­port showed, well be­low econ­o­mists' ex­pec­ta­tions for an in­crease of 215,000. June's pri­vate pay­roll gains were re­vised down to 229,000 from the pre­vi­ously re­ported 237,000.

The re­port, which is jointly de­vel­oped with Moody's An­a­lyt­ics, came ahead of the US gov­ern­ment's more com­pre­hen­sive em­ploy­ment re­port on Fri­day. Ac­cord­ing to a Reuters sur­vey of econ­o­mists, non­farm pay­rolls likely in­creased 223,000 last month, match- ing June's job gains.

Signs of a mod­er­a­tion in hir­ing and some stalling in wage growth could cast doubts on ex­pec­ta­tions that the Fed­eral Re­serve will raise rates in Septem­ber. The US cen­tral bank has kept its short-term in­ter­est rate near zero since De­cem­ber 2008.

US stock in­dex fu­tures marginally pared gains af­ter the data, while prices for US Trea­suries fell. The dol­lar edged up against a bas­ket of cur­ren­cies. In a sep­a­rate re­port, the Com­merce Depart­ment said the trade deficit in­creased 7.1 per cent to $43.8 bil­lion (Dh160.7 bil­lion), which also re­flected a sec­ond straight monthly drop in ex­ports. May's trade gap was re­vised to $40.9 bil­lion from re­ported $41.9 bil­lion.

Econ­o­mists had forecast the trade deficit ris­ing to $42.8 bil­lion. When ad­justed for in­fla­tion, the deficit in­creased to $59.3 bil­lion in June from $57.6 bil­lion in the prior month.

The trade data likely will have a mar­ginal im­pact on the sec­ond-quar­ter gross do­mes­tic prod­uct es­ti­mate re­leased last week, as the deficit on the goods bal­ance came in broadly in line with the ad­vance fig­ure in­cor­po­rated in the GDP re­port. In that re­port, the gov­ern­ment es­ti­mated the econ­omy ex­panded at a 2.3 per cent an­nual pace, with trade adding 0.13 per­cent­age point to GDP.

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